GLI (Global Liquidity Indexes) -- End-March 2014 Data Released

by Michael J. Howell14. April 2014 12:27

End-March GLI (Global Liquidity Index) data reported a decline in our World headline index to 53.0 from 54.2 in February (‘normal’ range 0-100), and set against a 2013 peak of 63.5. More than 60% of the World's Central Banks are now 'tight' according to our policy indicators. Admittedly, Developed Market Liquidity proved a tad stronger, but the much-needed monetary inflation is pausing. Experience warns that this can be dangerous for risk assets and real economic activity. At a minimum, we expect market volatility to rise, bonds to find support and the US dollar to remain firm. Equity investors may face an air-pocket, but there is no question in our mind that policy-makers will have to engage further doses of QE at some time in the future. Put bluntly, Q2 2014 may prove tricky for equities and the catalyst could be sharp downgrades in consensus estimates of Chinese economic growth.


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